In 2025, global insured catastrophe losses totalled $129 billion - with the US accounting for a staggering 78% of that figure. And 2026 is shaping up to be just as chaotic, especially in certain states.
Sustained catastrophe losses across California, Florida, and Texas are changing underwriting strategy forever - both at the carrier and reinsurance level. Speaking to Casey Carter, VP of Risk Management at REInsurePro, he explained that this shift is only accelerating.
“In California, the increasing rate in wildfire risk is running rampant through the state, seemingly year after year,” he told IB. “And it’s only getting worse. We've seen [lots] of locations at high risk for wildfire be non-renewed recently which pushes more and more individuals towards the state's fair plan and, after the large losses we've seen in 2025, towards the non-admitted market.”
While California grapples with wildfire exposure, Gulf and Atlantic states face a different but equally persistent threat - wind. And while the perils differ, the underwriting implications converge. Essentially, risk shouldn’t be viewed as cyclical or sporadic nowadays - it should be forward-looking and proactive.
“This risk is predominantly part of the future forecasts,” agreed Carter. “There’s always going to be a massive threat looming in the forefront of all these underwriting decisions, the appetite decisions and capacity decisions that organizations make.”
Texas, meanwhile, presents a uniquely complex challenge - combining multiple catastrophe exposures into a single, highly volatile environment. As Carter told IB, in North and West Texas there’s damaging hail storms occurring on an almost weekly basis.
“That might be a slight overstatement, but when I see claims coming in I think ‘goodness, another storm in Texas’. In Texas there’s these high winds and storms coming in all forms and speeds…which can be very complex to [deal with]. It’s [difficult] to keep your head above water when it comes to insurability in Texas.”
Faced with this sustained pressure, carriers are no longer relying on incremental adjustments, instead they’re fundamentally tightening underwriting discipline.
“From a carrier perspective, they’re beginning to implement much more rigorous and stringent underwriting restrictions - from sublimits on coverage to higher deductibles than we've seen in the past,” added Carter. “It comes down to their discipline in higher risk states to determine how profitable they are and whether they want to stay in that state or not.”
And, the same time, business is flowing away from admitted markets and into more flexible structures. According to Carter, this climate has created a near full sprint towards the Excess and Surplus (E&S) market.
“E&S markets allow for more aggressive pricing, more creative ways to ensure these high-risk locations, and get away from some of the statutes and restrictions in place in admitted markets. Reinsurers have begun pulling back from these high-frequency and high-severity layers. We’ve seen [data] projections de-emphasize these layers, leaving regional carriers more exposed. While on the flip side, there appears to be some softening of reinsurance rates on the horizon.”
And the data certainly chimes with Carter’s assertions here. According to figures from Fitch Ratings, Californian wildfires produced over $40 billion in insured losses in 2025 - the largest wildfire loss in US history. As such, more risks are being redirected into alternative mechanisms.
“The end result of all of this has [culminated] in a few [outcomes],” added Carter. “We see a long-term structural shift in shrinking capacity in these markets, with more and more business moving towards the E&S space, stricter underwriting and risk selection. Additionally, risks are increasingly being retained by primary carriers on higher layers and inevitably pushing consumers to higher deductibles and the residual market.”
In other words, risk is not disappearing - it’s being redistributed. And in this environment, the characteristics of individual properties and the behaviour of insureds are becoming more important to underwriting outcomes as well.
“We can break down the mitigation measures into two different categories,” explained Carter. “There are ones that protect against fire and then there are ones that protect against wind and hail. Because in the CAT heavy states, those are the two primary concerns we're worried about.
“[Essentially], it's about [presenting] all the risk mitigation the insured has done in an accurate and honest manner. There's nothing worse, as an underwriter, than receiving information that you know is false. Showing an underwriter that an insured cares to protect their risks themselves goes a long way - especially in an investment space. It's much more common in the homeowner space because the insured is the one that's living there, but in the investment space the insured is the landlord. They don't live there so they don't care as much.”
For agents, navigating this landscape requires a mixture of technical knowledge and clear communication. And, as Carter told IB, honesty is always going to be the best policy.
“The vast majority of agents primarily write in their backyard,” he explained. “[As such], they're going to know the risks that’re associated with the location. They’re dealing with the same challenges that that agent's going to face with their own personal property or investments - because most people are going to invest in their own area.”
Ultimately, maintaining insurability in catastrophe-heavy states depends on flexibility and innovation at every level of the market. And it all comes down to creative insurability strategy - something REInsurePro is known for.
“At REInsurePro, we're constantly thinking of how we can protect our carriers and still provide a solid set of coverages to the insured to protect their investments, as well as providing any type of coverage where other programs and other carriers have completely left the market. Because at REInsurePro, we really understand that we're a surplus lines market - we're not an admitted market - and we’re making sure we offer something that's attractive to all parties.”
This article was created in partnership with REInsurePro.
